[Cite as Advanced Travel Nurses, L.L.C. v. Watson, 2012-Ohio-3107.]
IN THE COURT OF APPEALS OF OHIO SECOND APPELLATE DISTRICT MONTGOMERY COUNTY
ADVANCED TRAVEL NURSES LLC, : et al. : Appellate Case No. 24628 : Plaintiff-Appellees : Trial Court Case No. 08-CV-3695 : v. : : (Civil Appeal from ANTHONY WATSON, et al. : (Common Pleas Court) : Defendant-Appellants : : ...........
OPINION
Rendered on the 6th day of July, 2012.
...........
LAWRENCE BUDENZ, 102 Elrod Court, Dayton, Ohio 45418 Plaintiff-Appellee, pro se
LAWRENCE W. HENKE, II, Atty. Reg. #0008039, 371 West First Street, Suite 100, Dayton, Ohio 45402 Attorney for Plaintiff-Appellee, Advanced Travel Nurses LLC
CHERYL R. WASHINGTON, Atty. Reg. #0038012, 130 West Second Street, Suite 450, Dayton, Ohio 45402 Attorney for Defendant-Appellant, Anthony Watson and Advanced Healthcare Staffing LLC
.............
HALL, J.
{¶ 1} Anthony Watson appeals from the trial court’s entry of final judgment against 2
him following a bench trial on the appellees’ complaint and on his counterclaims.
{¶ 2} Watson advances three assignments of error on appeal. First, he contends “the
trial court’s damage assessment was against the sufficiency and/or the manifest weight of the
evidence.” Second, he claims “the trial court erred in awarding attorney costs and fees.”
Third, he asserts that “the trial court erred in failing to award appellant compensation on his
counterclaims.”
{¶ 3} The present appeal stems from a business dispute involving appellant Anthony
Watson, appellees Charles Dickerson and Lawrence Budenz, and their various business
entities. The matter proceeded to a bench trial on a seven-count complaint filed by Dickerson,
Budenz, and one of the entities, Advanced Travel Nurses, LLC, against Watson and three
other entities, Advanced Healthcare Staffing, LLC, Advanced Care Services, LLC, and
Advanced Payroll Funding, LLC. As part of the bench trial, the trial court also disposed of
several counterclaims filed by Watson. After hearing days of testimony, the trial court found in
favor of the plaintiff-appellees on their complaint. It also ruled against Watson on the
counterclaims. The trial court awarded the appellees compensatory damages of $446,663.04
and punitive damages of $44,666.00. It also awarded the appellees attorney fees and costs
totaling $80,174.78. This timely appeal followed.
{¶ 4} The pertinent facts are set forth accurately and succinctly in the trial court’s
findings of fact and conclusions of law as follows:
Anthony Watson formed Advanced Healthcare Staffing, LLC
(“AHCS”) on November 21, 2006. Pl. Ex. 2. Watson formed Advanced Care
Services, LLC (“ACS”) on October 2, 2007. Pl. Ex. 3.Watson formed
Advanced Travel Nurses LLC (“ATN”) on February 14, 2008. Pl. Ex. 4, 24. On 3
March 28, 2007, Watson arranged for AHCS to enter into a Factoring and
Security Agreement with Advance Payroll Funding, Ltd, a company (despite
the similarity in name) unconnected to the entities created by Watson. Pl. Ex. 5.
The operations and finances of Watson’s three companies were
intermingled. For example, customer contracts for travel nurse services were
placed in the name of AHCS, even after ATN was formed. The business of
AHCS, however, was the per diem business, not the supply of travel nurses to
hospitals. Kristy Greene worker (sic) for AHCS but was paid by ATN. ACS
was involved in the Medicaid/Medicare business but it apparently never
generated any revenue prior to Watson’s departure. The companies and their
affairs were treated more like departments of a single corporation than as
separate and distinct corporate entities.
On March 24, 2008, Watson, ATN, AHCS, and ACS, entered into a
written agreement with Charles E. Dickerson (“Dickerson”) and Lawrence J.
Budenz (“Budenz”). Pl. Ex. 8. The salient terms of the March 24, 2008
Agreement were:
1. Watson become the sole owner of AHCS and ACS.
2. 80% of ATN went to Dickerson and 20% went to Watson.
3. Dickerson took responsibility for certain credit card debt.
4. Income received from ATN would pass though the Advance Payroll
factoring arrangement with AHCS through July 31, 2009.
5. All computers and software associated with travel nurses became the
sole property of ATN. 4
6. Dickerson agreed to pay a bill owing to Midwest Design for
computers totaling $3,300.91. There was no deadline in the agreement for this
payment.
7. All travel nurse income became the sole property of ATN.
8. Watson agreed to not borrow additional money from Advance Payroll.
9. The Nursing Corp forms could continue to be used by ATN.
Dickerson had been the landlord to Watson and his companies. See Pl.
Ex. 20A-20C. That relationship had evolved such that Dickerson had been
providing substantial financial assistance to Watson and his companies. See Pl.
Ex. 36. As part of that assistance, Dickerson had arranged for Budenz to assist
in the financial oversight and management of Watson’s companies. See Def.
Ex. L (1/1/08 Agreement), RR. While Budenz had a criminal past involving
financial improprieties, there is no credible evidence in the record that Budenz
engaged in any financial improprieties involving the companies at issue.
[footnote omitted].
Despite Dickerson’s financial assistance to Watson’s companies, they
continued in steep financial decline. Dickerson and Budenz believed, however,
that with improved financial oversight and management, the ATN business
could prove to be quite profitable, once broadly established. The ATN
business, however, required substantial up-front capital associated with the
placement of travel nurses in distant locales. Watson’s deteriorating financial
position and Dickerson’s and Budenz’s view that the ATN business merited
further investment led to the March 24, 2008 Agreement. 5
However, on April 11, 2008, Watson unilaterally declared Dickerson
and Budenz to be in a material breach of the March 24, 2008 Agreement. Pl.
Ex. 12; Def. Ex. C. Watson and others entered the companies’ office suites that
weekend and removed virtually everything, including but not limited to, files,
data, information, and computers used in the operation of ATN. Watson
testified that he believed that only materials relating to his solely owned
entities, AHCS and ACS, were removed from the offices. The greater weight of
the evidence, however, is that virtually everything was removed, including
materials essential to the operation and viability of ATN.
In the aftermath of Watson removing the files, Budenz informed
Watson that ATN was incurring and would continue to incur substantial
damages. Pl. Ex. 13A, 13B, 13C. ATN had 10 travel nurses recruited and
placement opportunities for them. With Watson’s departure, ATN was left
without even the names or contact information for those 10 travel nurses. None
of the items or data removed by Watson was ever returned to ATN.
In the days between the March 24, 2008 Agreement and Watson’s April
11, 2008 unilateral declaration of breach and April 12-13 removal of objects
and data from the offices, Watson, on or about March 31, 2008, recklessly
caused the health insurance coverage of ATN’s travel nurses to be cancelled,
causing disruption and harm to ATN’s operations. Further, certain funds that
would have been directed to the benefit of ATN (and applied towards
repayment of funds loaned or advanced by Dickerson and Budenz) were
re-directed to the benefit of Watson and/or Watson’s solely owned entities. See 6
Pl. Ex. 36. [footnote omitted]
Following Watson’s declaration of breach, additional funds to be paid by various
entities for the benefit of ATN also were re-routed or re-directed to the benefit of Watson
and/or Watson’s solely owned entities. See Pl.Ex.36. Watson contends that ATN, Dickerson
and Budenz wrongfully kept possession of and used certain copyrighted forms licensed to
Watson by Nursing Corp. See Def. Ex. E, CC, DD. However, the Court finds that ATN and its
employees did not use the Nursing Corp. forms, but even if they did, Watson incurred no
damages as a result of that usage. Nursing Corp never brought suit over the forms.
Watson also argues that he was frozen out of the financial affairs of his
companies, and left with virtually no information about their financial status.
The Court finds, however, that via periodic meetings with Budenz, data
provided weekly to Watson by Advanced Payroll, and other data shared with
Watson by Budenz, that Watson was not excluded from the business operations
and financial data was reasonably available to him. See Def. Ex. S.
Following Watson’s removal of data and property from the office
suites, ATN changed its name to Alternative Travel Nurses and attempted to
continue in business. Due to the business disruptions caused by Watson’s
removal of data and property, as well as the declining economy, Alternative
Travel Nurses operated for a short time before folding in June 2009.
Watson alleges that Budenz forged his name on certain drafts at various
financial accounts. The Court finds that these allegations are not credible and
not supported by the documentary evidence.
Plaintiffs’ Verified Complaint for Damages and Injunctive Relief, filed 7
April 18, 2008, asserts the following claims:
Count One Breach of Contract (including the implied duty of good faith
and fair dealing)
Count Two Breach of Fiduciary Duty by Minority Shareholder
Count Three Tortious Interference with Business Relations
Count Four Conversion (for removing property from the office suites)
(plus punitives)
Count Five Unjust Enrichment
Count Six Declaratory Judgment
Count Seven Injunctive Relief [footnote omitted]
Defendants Watson, AHCS and ACS assert counterclaims for fraud,
breach of contract, tortious interference with contract and unjust enrichment.
(Doc. #83 at 1-4).
{¶ 5} Based on the foregoing findings of fact, the trial court reached the following
conclusions of law:
Watson’s status as a minority owner of ATN created a fiduciary
responsibility between himself and Dickerson, and as between himself and
ATN. Watson breached that fiduciary duty in a number of ways, most notably
by removing things and data from the ATN offices during the weekend of April
12-13, 2008, which substantially impaired ATN’s business operations and
viability. Since the affairs of AHCS and ATN were so closely entwined and
intermingled, Watson’s fiduciary duty to ATN and Dickerson would not allow
him to wipe the offices clean under the rationale that he was taking only AHCS 8
and ACS materials. The Court finds that, by a preponderance of the evidence,
Plaintiffs have established that Watson’s conduct in unilaterally but without
legal justification declaring the March 24, 2008 Agreement in material breach
and resorting to the self-help remedy of clearing out the offices breached the
duty of good faith and fair dealing implicit in the Agreement, breached his
fiduciary duty owed to ATN and Dickerson, and constituted a conversion of
ATN’s property and assets (including but not limited to the nurse files and
contact information). See OJI CV625.01 (conversion).
The Court finds that the elements of tortious interference with business
relations have been proven by the greater weight of the evidence by Plaintiffs.
The cancellation of the health insurance certainly impaired ATN’s relationship
with the impacted nurses and, consequently, the hospitals where they were
placed. The cancellation of the nurses’ health insurance coverage by Watson
was reckless, at best.
Additionally, when Watson took the nurse files and contact information
from the office suites on April 12-13, 2008, the prospective business
relationships between the nurses, the hospitals, and ATN were intentionally
harmed leading directly and proximately to ATN suffering substantial
compensatory damages. The proof does not establish any justification or
privilege by Watson for this interference. See OJI CV 45301 (tortious
interference with business relations).
The Court further finds that Watson was unjustly enriched insofar as
Dickerson made substantial investment in ATN with the express and 9
reasonable expectation that he would be re-paid and later reap greater financial
rewards. Additionally, Budenz personally contributed funds to the business
entities in the reasonable expectation that he would receive reimbursement.
Watson’s conduct re-directed income such that funds that would have been
available to re-pay Dickerson and Budenz were directed for other purposes.
Moreover, Watson’s conduct placed ATN in an untenable financial and
business position.
The Court finds and concludes that Defendant’s counterclaims have not
been established by a preponderance of the evidence. Neither Dickerson nor
Budenz made any material misrepresentation of fact, affirmatively or by
omission, to Watson, upon which Watson justifiably relied. See OJI CV 449.03
(elements of fraud). Plaintiffs did not materially breach any contract with
Defendants. While Watson complained that the bill owing to Midwest Design
had not been paid by April 11, 2008, the Agreement provided no deadline for
that repayment and the greater weight of evidence establishes that a reasonable
arrangement for payment had been developed with that unpaid supplier.
Plaintiffs were not unjustly enriched; to the contrary, Dickerson (and to a lesser
extent Budenz) provided substantial capital to assist ATN but Watson drained
cash from ATN to enrich either himself or his other companies, all of which
were in dire financial distress.
The Court finds that compensatory damages should be awarded to
Plaintiffs as set forth on Pl. Ex. 35 in the amount of $456,333.04, less
$9,700.00 which was the amount of a check that St. John’s Hospital sent to 10
Advanced Payroll, for a total of $446,663.04. ATN had 10 nurses ready to
become placed with hospitals. While they had not been placed at the time of
Watson’s breach, their placement was substantially certain to occur. The Court
finds that such damages are not speculative.
“An award of punitive damages may be appropriate on a claim for
breach of fiduciary duty upon a showing of malice. Actual malice, necessary
for an award of punitive damages, is (1) that state of mind under which a
person’s conduct is characterized by hatred, ill will or a spirit of revenge, or (2)
a conscious disregard for the rights and safety of other persons that has a great
probability of causing substantial harm.” Blair v. McDonough, 177 Ohio App.
3d 262, 2008-Ohio-3698, 894 N.E.2d 377. See also Burn v. Prudential Sacs.,
Inc., 167 Ohio App. 3d 809, 2006-Ohio-3550, 857 N.E.2d 621; Schaefer v.
RMS Realty (2000), 138 Ohio App. 3d 244, 741 N.E.2d 155. Punitive damages
also may be awarded for intentional interference with business relations, under
the same standard.
The Court finds and concludes that Watson’s actions exhibited a
conscious disregard for the rights and interests of Plaintiffs that had a great
probability of causing substantial harm. Hence, the Court awards punitive
damages in the amount of 10% of the compensatory damages, that is, in the
amount of $44,666.00. Additionally, the Court awards Plaintiffs their attorney
fees and costs incurred in the action in an amount [of $80,174.78].
(Id. at 4-6).
{¶ 6} Watson raises three assignments of error on appeal: (1) “the trial court’s 11
damage assessment was against the sufficiency and/or the manifest weight of the evidence”;
(2) “the trial court erred in awarding attorney costs and fees”; and (3) “the trial court erred in
failing to award appellant compensation on his counterclaims.”1
{¶ 7} Upon review, we quickly may dispose of the second and third assignments of
error, which are without merit. With regard to attorney fees and costs, Watson asserts, in
conclusory fashion, that attorney fees generally are not awarded unless the losing party has
acted “in bad faith, vexatiously, wantonly, obdurately, or for oppressive reasons.” (Appellant’s
brief at 16).
{¶ 8} In the present case, however, the trial court awarded Budenz and Dickerson
punitive damages in connection with their claims for breach of fiduciary duty and intentional
interference with business relations. (Doc. #83 at 6). This award of punitive damages
permitted an award of attorney fees. See, e.g., Zoppo v. Homestead Ins. Co., 71 Ohio St.3d
552, 558, 1994-Ohio-461, 644 N.E.2d 397 (recognizing that “attorney fees may be awarded as
an element of compensatory damages where the jury finds that punitive damages are
warranted”). The second assignment of error is overruled.
{¶ 9} The third assignment of error is equally unpersuasive. The counterclaims at
1 In his reply brief, Watson urges us to strike appellee Budenz’s pro se appellate brief for failure to provide adequate citations to the record. Despite the lack of certain citations, and in the exercise of our discretion, we decline to strike the brief. We also reject the suggestion, implicit in Watson’s reply brief, that he is entitled to prevail on appeal because Budenz neglected to cite the trial transcript. Watson notes that an appellate court may disregard an appellant’s assignment of error for failure to cite the portions of the record supporting the assigned error. In the present case, however, Budenz does not raise any assignments of error. He simply defends the judgment entered below. Watson is not entitled to prevail on appeal simply because Budenz’s brief may be deficient. In an analogous context, this court has recognized that a party is not entitled to summary judgment simply because his opponent has failed to file a responsive brief. (Lenco Corp. v. Schear's Metro Markets, Inc., 2d Dist. Montgomery No. 13580, 1993 WL 211333 (June 16, 1993)). A(“Metro was not automatically entitled to summary judgment merely because Lenco failed to respond to the summary judgment motion. Rather, Metro was entitled to summary judgment only if after construing the evidence in Lenco’s favor, reasonable minds could only come to one conclusion which was adverse to Lenco.”). 12
issue involved the appellees’ alleged failure to pay a bill owed to a company named Midwest
Design and the appellees’ alleged unauthorized use of forms provided by a company named
Nursing Corp. With regard to the bill, the trial court found that there was no set deadline for
payment and that the appellees had reached a payment agreement satisfactory to Midwest
Design. (Doc. # 83 at 5). As for the forms, the trial court found that the appellees did not use
the forms and, even if they did, Watson suffered no harm because Nursing Corp never brought
suit over the forms. (Id. at 3). The record supports the trial court’s findings on these issues.
The third assignment of error is overruled.
{¶ 10} The first assignment of error requires a more detailed analysis. Watson raises
five damages-related arguments. He asserts that the trial court erred by: (1) finding damages
not speculative; (2) finding Dickerson entitled to recover an initial $50,000 investment he
made; (3) awarding damages for unjust enrichment; (4) not finding a failure to mitigate
damages; and (5) awarding the appellees punitive damages.
{¶ 11} The argument about damages being too speculative concerns the 10 travel
nurses who Advanced Travel Nurses (ATN) was in the process of placing with hospitals on
initial 13-week contracts when Watson removed the files, computers, and other items from the
offices. The trial court awarded the appellees $234,000 in lost profits as a result of ATN’s
inability to place the nurses after Watson removed the files and irreparably disrupted the
business. Watson contends these lost profits were too speculative because ATN was relatively
new, had not yet been profitable, had little money, and had no assurance that the nurses would
be placed. He notes, among other things, that they had not yet been interviewed by the
hospitals, drug tested, or background checked. Watson also argues that the new nurses may
not have been profitable, even if they had been hired, and that they may not have remained 13
employed very long.
{¶ 12} We review a trial court’s damages determination, including its determination
as to whether claimed damages are too speculative, for an abuse of discretion. Roberts v.
United States Fid. & Guar. Co., 75 Ohio St.3d 630, 634, 665 N.E.2d 664 (1996); see also
Noyes v. Noyes, 2d Dist. Montgomery No. 14008, 1994 WL 102101 (March 30, 1994).
{¶ 13} As set forth above, Watson formed his travel-nurse business, ATN, in
February 2008. He then entered into a business relationship with Budenz and Dickerson in
March 2008. Watson removed the crucial files and data from ATN’s offices in April 2008. By
that time, approximately 10 travel nurses were working for the company. Six of them quit
upon discovering that Watson had cancelled their health insurance before removing ATN’s
files. (Trial transcript at 245, 247, 294-295). With the income generated from those 10 nurses
before they quit, ATN was approaching profitability if not already marginally profitable. (Id.
at 278, 302, 851-853, 1829).
{¶ 14} To establish lost profits, Budenz and Dickerson relied largely on evidence that
10 more travel nurses were in the process of being hired and placed at hospitals when Watson
removed ATN’s files. Based on their experience with the nurses who had been working for
them, Budenz and Dickerson estimated a 25 percent gross profit on all revenue generated by
the additional nurses. (Id. at 846, 1829). In light of the fact that ATN successfully had placed
all prior travel-nurse applicants, Budenz anticipated that all of the new nurses would be
placed. (Id. at 279). Budenz also explained, in some detail, how he and Dickerson had
calculated the lost profits attributable to Watson’s actions. (Id. at 300-302). On direct
examination, Budenz engaged in the following discussion with his attorney:
Q. * * * Let’s go to, if we can for a second, focus on loss of revenue 14
from the ten nurses that could not be placed when Mr. Watson took everything
from the offices on the weekend of 4/11 to 4/13 ‘08. And I believe you can
probably reference Plaintiff’s Exhibit 16 as a guide or as a help perhaps. I
believe you testified earlier that the expected gross profit there was somewhere
in the range of I think $30,000 was it a month or–
A. I had testified that on the e-mails from Mr. Watson that I had sent to
him–
Q. Right.
A. –that I identified that since we got about $30,000 gross billings over
a thirteen-week period from each nurse that the anticipated gross revenues
would be $300,000.
Q. Okay. Let’s put that in perspective. How many times, within a
reasonable probability, would you expect the nurses after you place them the
first time would re-sign with you?
A. The IRS permits 39 weeks of temporary work a year to qualify for
the tax-free lodging and meals and incidentals. So, it was common for a nurse
to extend beyond the first 13-week period if they like the hospital. So the
probability would have exceeded 80 percent. You would anticipate four of
every five nurses extending–
Q. For how long?
A. For two more 13-week periods.
Q. Which equals the 39–
A. Which equals the 39 that the IRS allows, yes. 15
Q. Okay. Using that benchmark or that as a factoring device, can you
tell us how much gross profit then based upon a 39-week basis the company
lost from not placing these ten new nurses.
A. Well, if we take the $300,000 which would have been the first
13-week period, and use an 80 percent factor, that would be $240,000 for the
second period, and $240[,000] for the third period. So, that would be $480,000
for the two extended periods plus $300,000 for the original period. And 240,
240 and 300,000 would be $780,000. And 25 percent of that for almost
$200,000 would have been the actual profit lost from those nurses not working
for the company.
Q. So within a reasonable probability expected a net profit of 25 percent
off of the $780,000?
A. That’s what is shown on the budget at Exhibit 16 that you referred to
is that we anticipated a gross profit of 25 percent because the average direct
cost is 75 percent. And since we had just met all of our other operating
expenses, all of this other [income] would have gone toward profit. All this
other incoming—all of this other money from these other ten nurses and any
other nurses that we could have hired would have all gone towards profit.
Q. Because all of your operating expenses and payroll had been paid?
A. They’re all paid for. And any of the direct expenses like the
insurance and payroll taxes are budgeted in that 75 percent.
(Id. at 300-302).
{¶ 15} The test for recovery of lost profits is found in Charles R. Combs Trucking, 16
Inc. v. Internatl. Harvester Co., 12 Ohio St.3d 241, 466 N.E.2d 883 (1984), at paragraph two
of the syllabus: “‘Lost profits may be recovered by the plaintiff in a breach of contract action
if: (1) profits were within the contemplation of the parties at the time the contract was made,
(2) the loss of profits is the probable result of the breach of contract, and (3) the profits are not
remote and speculative and may be shown with reasonable certainty.’” AGF, Inc. v. Great
Lakes Heat Treating Co., 51 Ohio St.3d 177, 181, 555 N.E.2d 634, 638 (1990) (quoting
Combs). “In order for a plaintiff to recover lost profits in a breach of contract action, the
amounts of lost profits, as well as their existence, must be demonstrated with reasonable
certainty.” Gahanna v. Eastgate Properties, Inc., 36 Ohio St.3d 65, 521 N.E.2d 814 (1988),
syllabus.
{¶ 16} The Ohio Supreme Court has recognized that “‘[t]he difficulty of proving lost
profits varies greatly with the nature of the transaction.’” (Citation omitted). AGF at 181. “‘If
the breach prevents the injured party from carrying on a well-established business, the
resulting loss of profits can often be proved with sufficient certainty. Evidence of past
performance will form the basis for a reasonable prediction as to the future. * * * However, if
the business is a new one or if it is a speculative one that is subject to great fluctuations in
volume, costs or prices, proof will be more difficult. Nevertheless, damages may be
established with reasonable certainty with the aid of expert testimony, economic and financial
data, market surveys and analyses, business records of similar enterprises, and the like.’” Id.
{¶ 17} In AGF, the Ohio Supreme Court opined that “a new business may recover
lost profits in a breach of contract action but such lost profits must be established with
reasonable certainty.” Id. at 183. The AGF majority further held that “a new business may
establish lost profits with reasonable certainty through the use of such evidence as expert 17
testimony, economic and financial data, market surveys and analyses, business records of
similar enterprises, and any other relevant facts.” Id. at 183-184.
{¶ 18} On appeal, Watson criticizes Budenz and Dickerson for lacking the foregoing
types of evidence. Having reviewed the record, we are unpersuaded that a lack of such
evidence was fatal to the appellees’ recovery of lost-profit damages. The Ohio Supreme Court
noted in AGF that the difficulty of proving lost profits varies greatly depending on the nature
of the business. Despite ATN’s relative newness, the company had a record of placing travel
nurses with hospitals and receiving revenue for their work. Based on that experience, Budenz,
an accountant, explained that ATN earned a 25 percent gross profit from the revenue
generated by each travel nurse. Budenz further testified that ATN was able to cover its
operating expenses by April 2008 when it employed 10 travel nurses. According to Budenz,
the gross profit generated from the 10 additional travel nurses who were in the process of
being employed would have flowed directly to the company’s bottom line as net profit. These
calculations, which Budenz explained in his testimony and which were supported by written
exhibits, were relatively uncomplicated and did not require “economic and financial data,
market surveys and analyses, [or] business records of similar enterprises.”
{¶ 19} As the Ohio Supreme Court recognized in AGF, in certain cases “past
performance will form the basis for a reasonable prediction as to the future.” Id. at 181. The
trial court reasonably could have found this to be one of those cases despite ATN’s relative
youth. ATN had been operating long enough for Budenz to know the hourly rate the company
charged hospitals for travel-nurse services, the profit margin for each travel nurse employed,
and the company’s monthly operating expenses. These figures enabled Budenz to project
near-term future profits with reasonable certainty. Significantly, the appellees did not attempt 18
to project lost profits far into the future. ATN nurse recruiter Kristie Green opined that the
company would have had more than 20 travel nurses and would have continued growing if
Watson had not wrecked the business. (Trial transcript at 803-804). Nevertheless, the
appellees sought lost profits for only the 10 travel nurses who were in the process of being
employed and for only one 39-week cycle. (Plaintiff’s Exhibit 35).
{¶ 20} Having determined that the lost profits for each travel nurse ATN was in the
process of hiring were not speculative, the remaining question is whether the appellees
established, with reasonable certainty, that the new nurses actually would have been placed if
Watson had not removed virtually everything from the company’s office. In resolving this
issue, the trial court reasoned: “ATN had 10 nurses ready to become placed with hospitals.
While they had not been placed at the time of Watson’s breach, their placement was
substantially certain to occur. The Court finds that such damages are not speculative.” (Doc.
#83 at 6).
{¶ 21} We see no abuse of discretion. Although the travel nurses whose files were
taken had not yet been drug tested, interviewed by a particular hospital, or placed on site,
Budenz testified that ATN successfully had placed all of its prior travel nurses. Similarly,
ATN recruiter Kristie Green, who had significant experience in the travel-nurse industry,
testified that she typically experienced an 80 to 90 percent placement rate once a nurse’s name
was placed on the “hot board.” 2 (Trial transcript at 744-748). Green had a working
relationship with a hospital association representing between 1,000 and 1,500 hospitals that
used travel nurses. (Id. at 751). In light of this evidence, the trial court acted within its
2 We note that the names of the 10 travel nurses at issue in this case had been placed on the board. 19
discretion in finding that the travel nurses at issue were “substantially certain” to be placed.
{¶ 22} Nevertheless, we have found a minor error in the trial court’s damages
computation that requires correction. The trial court awarded the appellees total compensatory
damages of $456,333.04, as set forth in Plaintiff’s Exhibit 35, minus the amount of a small
check that had been received. (Doc. #83 at 6). The compensatory damages award included
$234,000 in lost profits for the 10 travel nurses discussed above. This figure was based on all
10 nurses completing three 13-week contracts for a total term of 39 weeks each. (Pl. Exh. 35).
The trial court then reduced this lost-profit figure, as well as other components of the
lost-profit award, by 20 percent to account for Watson’s 20 percent ownership interest in
ATN.
{¶ 23} At trial, however, Budenz testified that in his experience travel nurses
renewed their initial 13-week contract for two more13-week periods only 80 percent of the
time. Therefore, he anticipated that only 8 of the 10 new nurses would have worked for ATN
for a full 39 weeks. Using the figures in Plaintiff’s Exhibit 35 and making this adjustment
results in gross revenue of $312,000 to ATN for the first 13-week period, $249,600 for the
second 13-week period, and $249,600 for the third 13-week period. Therefore, ATN’s total
lost revenue was $811,200 for the 10 nurses at issue. Applying the 25 percent profit margin set
forth in Plaintiff’s Exhibit 25 results in lost profits of $202,800 (not $234,000 as the trial court
found) due to ATN’s inability to employ the 10 new travel nurses. Using the $202,800 figure
makes the damages owed to ATN $335,280 (not $366,480 as the trial court found).
{¶ 24} Deducting Watson’s 20 percent ownership of ATN from the $335,280 figure
results in damages to Dickerson (due to his 80 percent ownership of ATN) of $268,224 (not
$293,184 as the trial court found). Adding this $268,224 to the other damages listed on 20
Plaintiff’s Exhibit 35 results in total compensatory damages of $431,373.04 (not $456,333.04
as the trial court found). From its total-damages figure the trial court deducted $9,700 to
account for a check that had been received. Deducting this $9,700 from total damages of
$431,373.04 results in a final figure of $421,673.04. Accordingly, the trial court’s judgment
will be modified to reduce the total compensatory damages award to $421,673.04.
{¶ 25} The next two issues under Watson’s first assignment of error concern whether
Dickerson was entitled to recover, as damages, two $50,000 infusions of capital he made into
ATN. Watson claims the first $50,000 was a speculative investment that did not need to be
repaid. With regard to the second $50,000, Watson argues only that the trial court should have
awarded those damages under contract law rather than under a theory of unjust enrichment.
{¶ 26} Upon review, we find no merit in either argument. Dickerson testified that he
first made a $50,000 line of credit available to ATN at a time when Watson and Budenz were
running the company together. (Trial transcript at 64-72). He explained as follows: “For the
first $50,000 to be available for them to use for business purposes, a deal was struck where
Mr. Budenz would own 25 percent and Mr. Watson would own 75 percent and I’d own
nothing. It was just making a loan.” (Id. at 72, 75). In light of this testimony, we reject
Watson’s argument that the initial $50,000 was not a loan and that it did not need to be repaid.
{¶ 27} The record reflects that Dickerson made the second $50,000 infusion of
capital in exchange for a controlling ownership interest in ATN. (Id. at 76). In its ruling, the
trial court found Dickerson entitled to recover this money, and other damages, as a result of
Watson’s actions. In support, the trial court reasoned: “The Court further finds that Watson
was unjustly enriched insofar as Dickerson made substantial investment in ATN with the
express and reasonable expectation that he would be re-paid and later reap greater financial 21
rewards. Additionally, Budenz personally contributed funds to the business entities in the
reasonable expectation that he would receive reimbursement. Watson’s conduct re-directed
income such that funds that would have been available to re-pay Dickerson and Budenz were
directed for other purposes. Moreover, Watson’s conduct placed ATN in an untenable
financial and business position.” (Doc. #83 at 5).
{¶ 28} Although Watson quibbles with the trial court’s reliance on unjust enrichment
rather than traditional contract law, the outcome is the same under either theory. See Gevedon
v. Gevedon, 167 Ohio App.3d 1, 2006-Ohio-2668, 853 N.E.2d 718 (2d Dist.) (recognizing that
breach of contract and unjust enrichment can serve as alternative theories to recover the same
damages). The essence of the trial court’s ruling was that Watson’s actions destroyed ATN’s
viability and caused significant financial loss for Dickerson. The trial testimony supports this
conclusion. Therefore, the trial court did not err in finding Dickerson entitled to recover the
money he lost as a result of Watson’s actions. Because the trial court awarded Dickerson the
money only once, it matters not whether the trial court applied traditional contract or unjust
enrichment law.
{¶ 29} The next issue under Watson’s first assignment of error is whether the
appellees failed to mitigate their damages. Watson notes that the appellees created
“Alternative Travel Nurses” after he removed the files and computers from ATN’s offices.
According to Watson, the appellees then leased Alternative Travel Nurses two offices that
previously had been leased by Watson for another one of his companies, Advanced Healthcare
Staffing. Watson contends the appellees neglected to collect any rent from Alternative Travel
Nurses, thereby failing to mitigate the damages caused by his non-payment of rent from March
through July 2008. (See Plaintiff’s Exhibits 20(A), 20(B), and 20(C)). Finally, Watson 22
contends the appellees failed to mitigate damages by not attempting to finish placing the 10
travel nurses who were in the process of being hired when he removed ATN’s files and
equipment.
{¶ 30} Both arguments lack merit. Budenz testified that Watson had leased several
offices from Dickerson on behalf of Advanced Healthcare Staffing. According to Budenz,
Dickerson also gave Watson free use of one area, a former conference room identified as
“Office 1” on Plaintiff’s Exhibit 20(C). Budenz testified that Alternative Travel Nurses
occupied this room after ATN’s demise. Because Watson had not been charged for using
Office 1, and Alternative Travel Nurses paid no rent for it, Budenz explained that Watson’s
unpaid rent obligation was not reduced to account for Alternative Travel Nurses’ use of the
space. (Trial transcript at 305-308). As for the other areas that had been leased by Watson,
Budenz testified that Dickerson unsuccessfully tried to re-lease them. (Id. at 308). For his part,
Dickerson believed that Alternative Travel Nurses had leased two rooms that formerly had
been used by Watson. (Id. at 40-43). He was unable to produce a lease, however, or recall the
dollar amount of the new lease. (Id. at 95-96). He agreed, however, that Alternative Travel
Nurses never paid rent. (Id.).
{¶ 31} In light of the foregoing evidence, the trial court did not err in awarding
Dickerson the unpaid rent owed by Watson. The total amount owed was $12,778.58.
(Plaintiff’s Exhibit 20(B)). Budenz’s testimony supports a finding that Dickerson
unsuccessfully tried to re-lease the office space at issue and, therefore, attempted to mitigate
his damages. Budenz’s testimony also supports a finding that Alternative Travel Nurses
moved into one office that Watson previously had used without charge. Even if Alternative
Travel Nurses also occupied one other office without paying for a short time, as Dickerson 23
believed, any resulting reduction in Watson’s total unpaid-rent obligation would be minimal.
{¶ 32} With regard to the second mitigation issue, the evidence supports a finding
that Watson’s actions made placement of the 10 additional travel nurses virtually impossible.
In addition to removing all documents and contact information, Watson tarnished the
appellees’ reputation in the industry, making it unlikely that any hospitals or nurses would
conduct business with Budenz and Dickerson. Therefore, the trial court did not err in rejecting
a failure-to-mitigate argument based on Alternative Travel Nurses’ failure to place the 10
travel nurses who were in the process of being hired when Watson emptied ATN’s offices.
{¶ 33} Watson’s final argument under his first assignment of error concerns the trial
court’s imposition of punitive damages. The evidences supports a finding that Watson acted
with malice when he cancelled the travel nurses’ health insurance and, later, when he removed
the files and equipment from ATN’s offices, thereby destroying the appellees’ ability to
conduct business. Although Watson attributes his actions to mistakes or negligence, the trial
court acted within its discretion, as trier of fact, in finding otherwise. Therefore, the trial court
correctly found that punitive damages could be awarded based on the appellees’ successful
claim for breach of fiduciary duty and a finding of malice. Schafer v. RMS Realty, 138 Ohio
App.3d 244, 302, 741 N.E.2d 155 (2d Dist.2000).
{¶ 34} We also reject Watson’s argument that the trial court imposed grossly
excessive punitive damages. The trial court awarded punitive damages equal to 10 percent of
its compensatory damages award. (Doc. #83 at 6). Watson asserts, however, that “a huge
disparity” exists between the actual harm suffered by the appellees and the punitive damages
awarded. We disagree. The trial court awarded punitive damages equaling just one-tenth of the
compensatory damages. This court has upheld, as not unconstitutionally excessive, a punitive 24
damages award nearly eight times larger than the actual damages. Id. at ¶ 124-125. We see
nothing excessive about the award in this case. Moreover, the trial court reasonably could
have found its punitive damages award necessary to achieve the legitimate goals of
punishment and deterrence. Id. at ¶ 118.
{¶ 35} We held above, however, that the trial court’s total compensatory damages
award must be reduced from $446,663.04 to $421,673.04. Ten percent of the reduced
compensatory damages award is $42,167.30. Therefore, the trial court’s $44,666.00 punitive
damages award will be reduced to $42,167.30.
{¶ 36} Watson’s first assignment of error is sustained in part and overruled in part. It
is sustained to the extent that we have found him entitled to the foregoing reductions. The trial
court’s judgment is hereby modified to reflect a compensatory damages award against Watson
in the amount of $421,673.04 and a punitive damages award against him in the amount of
$42,167.30. The remainder of the judgment remains undisturbed. As so modified, the
judgment of the Montgomery County Common Pleas Court is affirmed.
DONOVAN and FROELICH, JJ., concur.
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Lawrence Budenz Lawrence Henke Cheryl Washington Hon. Mary L. Wiseman